List of Documentation Needed In Export

Business
Article shared by DK Sinha

An obvious question arises is: why is documentation needed in export business? Answer to this
question lies in the nature of the business relations between the exporter and the importer
operating from two countries. One knows, unlike the domestic business, the commercial
practices and legal systems are different in the two countries the exporter and importer are
operating from.

Therefore, in order to protect the respective interests of the exporter and the importer involved in
export business, certain documentary formalities become essential. Such documentation
facilitates the smooth flow of goods and payments thereof across national frontiers.

Export documents based on the functions performed by them are broadly classified into
four types:

1. Commercial Documents

2. Regulatory Documents

3. Export Assistance Documents

4. Documents required by Importing Countries.

Let us now discuss the specific documents and functions performed by them under each
category.

Commercial Documents:

1. Commercial Invoice:

This is the first basic and the only complete document in an export transaction. It is, in fact, a
document of contents containing information about goods. Harmonized System Nomenclature
(HSN), price charged, the terms of shipment and marks and numbers on the packages containing
the merchandise.

The exporter needs this document for other purposes also such as:

(i) Obtaining export inspection certificate

(ii) Getting excise clearance

(iii) Getting customs clearance and

(iv) Securing such incentives as cash compensatory support (CCS) and import license.

This document is prepared at both the pre-shipment and post-shipment stages.

Besides commercial invoice, there is a proforma invoice also. It is a temporary commercial

invoice which is sent by the exporter to the importer. It covers contemplated shipment which
may or may not be made in future.

The importer requires this document for obtaining an import license and opening a letter of credit
in favour of the exporter. With such obvious importance of proforma invoice, the exporter should
cultivate a habit of sending proforma invoice to the importer, even if the same is not demanded.

2. Bill of Lading:

Bill of lading (B/L) is a document which is issued by the shipping company acknowledging that
the goods mentioned therein are either being shipped or have been shipped. This is also an
undertaking that the goods in like order and condition as received will be delivered to the
consignee, provided that the freight specified therein has been duly paid.

Bill of lading serves three distinct functions:

(i) It is an evidence of the contract of affreightment (transport).

(ii) It is a receipt given by the shipping company for cargo received by it.

(iii) It is a document of title to the goods shipped.

The bill of lading gives the details about the exporter, carrying vessel, goods shipped, port of
shipment, destination, consignee and the party to be notified on arrival of the goods at
destination. Bill of ladings is made the sets.

3. Airway Bill:

In air carriage, the transport document is known as the airway bill. This document performs three
functions of a forwarding note for the goods, receipt for the goods tendered, and authority to
obtain delivery of goods. Since it is non-negotiable, so it does not carry the same validity as a bill
of lading for sea transport carries.

4. Bill of Exchange (B/E):

Bill of exchange is an instrument or draft used for the payment in international / export business.
It is an instrument in writing containing an unconditional order, signed by the marker, directing a
certain person to pay a certain sum of money only to or to the order of a person or to the bearer
of the instrument. The person to whom the bill of exchange is addressed is to pay either on
demand or at a fixed or a determinable future.

There are three parties involved in a bill of exchange:

(i) The Drawer (Exporter):

The person who makes and executes the B/E or say, the person to whom payment is due.

(ii) The Drawee (Importer):

The person on whom the B/E is drawn and who is required to meet the terms of the document.

(iii) The Payee (Exporter or Exporter’s Bank):

The party to receive the payment.

5. Letter of Credit:

It is a written instrument issued by the buyer’s (importer’s) bank, authorising the seller (exporter)
to draw in accordance with certain terms and stipulating in a legal form that all such bills (drafts)
will be honoured. Letter of credit provides the exporter with more security than open accounts or
bills of exchange.

A commercial letter of credit involves the following three parties:

(i) The opener or importer – the buyer who opens the credit

(ii) The issuer – the bank that issues the letter of credit.

(iii) The beneficiary – the seller in whose favour the credit is opened.

Based on differing conditions, letters of credit may be of the following types:

(a) Revocable and Irrevocable:

In case of revocable letter of credit, the buyer or issuer can cancel or change an obligation at any
time prior to payment without prior notice to the exporter or seller. When the letter is
irrevocable, the buyer cannot cancel or change obligation without the exporter’s permission.

(b) Confirmed and Unconfirmed:

In case of confirmed letter of credit, the payment is guaranteed by the issuing bank. When the
letter is unconfirmed, no such guarantee is given by the bank.

(c) With and Without Recourse:

With recourse means if the buyer fails to pay the bank after a specified period, the bank can have
recourse on the exporter. There is no such provision in the letter of credit without recourse.

Regulatory Documents:

1. Legal Documents for Export from India:

There are two types of regulatory documents:

(i) Documents needed for registration, and

(ii) Documents needed for shipment.

The first category documents include applications and other supporting documents for
obtaining:

(i) Code number from the Reserve Bank of India (RBI),

(ii) Importers and exporters’ code numbers from the Chief Controller of Imports and Exports,

(iii) Registration-cum-membership certificate (RCMC), etc.

The documents needed for shipment of goods include the following:

(i) GR Form:

It is required to be filled in duplicate for all exports other than by post. Both of the copies have to
be submitted to the customs authorities at the port of shipment. They will retain the original copy
to be sent to the Reserve Bank of India directly.

They will return the duplicate copy which is submitted to the negotiating bank along with other
documents after shipment of goods. The negotiating bank sends the duplicate copy to the RBI
after the export proceeds have been realised.

(ii) PP Form:

Exports to all countries by parcel post (PP), except when made on ‘value payable’ or ‘cash on
delivery’ basis should be declared on PP forms.

(iii) VP/COD Form:

It is required to be filled in one copy for exports to all countries by post parcel under
arrangements to realise proceeds through postal channels on ‘value payable’ or ‘cash on
delivery’ basis.

(iv) EP Form:
Shipment to Afghanistan and Pakistan other than by post should be declared on EP forms.

(v) SOFTEX Form:

It is required to be prepared in triplicate for export of computer software in non-physical form.

2. Shipping Bill:

The shipping bill is the main document on the basis of which the custom’s permission for export
is given. Post parcel consignment requires customs declaration form to be filled in. There are
three types of shipping bills available with the customs authorities.

These are:

(i) Free Shipping Bill:

It is used for export of goods for which there is no export duty.

(ii) Dutiable Shipping Bill:

Printed on yellow paper, it is used in case of goods which are subject to export duty/cess.

(iii) Drawback Shipping Bill:

It is usually printed on green paper and is used for export of goods entitled to duty drawback.

3. Marine Insurance Policy:

It is the basic instrument in marine insurance. A marine policy is a contract and a legal document
which serves as evidence of the agreement between the insurer and the assured. The policy must
be produced to press a claim in a court of law. An exporter must also put up the marine insurance
policy as a collateral security when he gets an advance against his bank Credit.

Exports Assistance Documents:

For availing of a number of incentives and assistance, an exporter is required to fill in a number
of documents.

Some of the important ones of these are discussed here:

1. Application Form for Registration:

Exporters desirous of availing themselves of the benefits of the import policy are required to
register themselves with the appropriate registering authority such as Export Promotion Councils
(EPC), Commodity Boards and Chief Controller of Imports and Exports (CCIE), New Delhi.
The application for registration should be accompanied by a certificate from the exporter’s
bankers in regard to his financial soundness. In case of a firm having branches, the application
for registration shall be submitted only by the Head Office.

2. Allotment of Indigenous Raw Materials on Priority Basis:

Manufacturer- exporters may apply to the Director of Export Promotion, Ministry of Commerce,
for replenishment of the indigenous materials used in the manufacture of goods for export.

3. Duty Drawback:

For claiming this incentive, the main document is the customs attested drawback copy of
shipping bill. This is to be accompanied by other documents such as drawback payment order,
final commercial invoice and a copy of bill of lading or airway bill, as the case may be.

4. REP License and CCS:

For claiming REP license and cash compensatory support (CCS), the exporter is required to
prepare and file a number of documents.

The main documents in this regard are:

(i) Application in the prescribed form

(ii) Acknowledgement slip

(iii) Bank challan issued by the treasury for the application fee paid.

(iv) Advance receipt for cash assistance amount

(v) A duly certified copy of shipping bill.

(vi) Non-negotiable copy of bill of lading/airway bill.

Documents required by importing Countries:

In case of export business, the importing countries need some documents because of the legal
necessity. These documents are obtained by the exporter and are sent to the importer.

Some of the well-known documents are as follows:

1. Consular Invoice:

It is usually issued on the specified form by the consulate of the importing country situated in the
exporting country. It gives a declaration about the true value of goods shipped. The customs
authorities of importing company charge valorem based on the value mentioned on consular
invoice.

2. Certificate of Origin:

This certificate is issued by the independent bodies like chamber of commerce or export
promotion council in the exporting country. This is a certification that the goods being exported
were actually produced in that particular country.

3. GSP Certificate of Origin:

Goods which get the benefit preferential import-duty treatment in countries which implement the
Generalised System of Preferences (GSP) should be accompanied by the GSP certificate of
origin. This certificate is given on the forms prescribed by the importing countries.

4. Customs Invoices:

It is also made out on a specified form prescribed by the customs authority of the importing
country. The details given on the document will enable the customs authority of the importing
country to levy and charge import duty.

5. Certified Invoice:

This is the self-certified invoice by the exporter about the origin of the goods.